Part I. Financial Information Item 1. Consolidated Financial Statements Unaudited consolidated financial statements show total assets at $7.58 billion, with Q3 2024 net income of $19.6 million and nine-month net income of $56.5 million Consolidated Statements of Financial Condition Total assets increased to $7.58 billion as of September 30, 2024, driven by higher net loans, with corresponding increases in liabilities and equity Consolidated Balance Sheet Highlights (in thousands) | Account | September 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total Assets | $7,582,192 | $7,380,680 | | Loans, net | $6,253,292 | $6,054,228 | | Total Deposits | $6,634,276 | $6,491,276 | | Total Liabilities | $6,810,483 | $6,672,537 | | Total Stockholders' Equity | $771,709 | $708,143 | Consolidated Statements of Operations Net interest income increased to $61.2 million in Q3 2024, driving net income to $19.6 million and diluted EPS to $0.39, with nine-month net income at $56.5 million Quarterly and Nine-Month Performance (in thousands, except per share data) | Metric | Q3 2024 | Q3 2023 | Nine Months 2024 | Nine Months 2023 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $61,163 | $55,127 | $175,649 | $167,887 | | Provision for Credit Losses | $3,533 | $3,329 | $7,571 | $10,390 | | Net Income | $19,649 | $16,863 | $56,494 | $49,018 | | Diluted EPS | $0.39 | $0.34 | $1.12 | $0.99 | Consolidated Statements of Cash Flows Net cash from operating activities was $71.3 million for the nine months ended September 30, 2024, with investing activities using $225.2 million, leading to an $18.3 million net decrease in cash Cash Flow Summary for Nine Months Ended Sep 30 (in thousands) | Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $71,264 | $71,183 | | Net Cash used in Investing Activities | ($225,166) | ($512,585) | | Net Cash from Financing Activities | $135,610 | $374,455 | | Net Decrease in Cash | ($18,292) | ($66,947) | Notes to Consolidated Financial Statements Notes detail accounting policies, the pending merger with First Busey Corporation, loan portfolio composition, ACL methodology, and regulatory capital - On August 26, 2024, CrossFirst entered into a merger agreement with First Busey Corporation, expected to close in Q1 or Q2 2025, subject to approvals22 - The company's loan portfolio is segmented into Commercial and Industrial, Energy, Commercial Real Estate, Residential Real Estate, and Consumer loans, with detailed risk rating methodologies444547 - The Allowance for Credit Losses (ACL) is estimated using a CECL methodology combining asset-specific reserves, quantitative cohort analysis, and qualitative adjustments based on economic factors and forecasts697273 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management reported improved Q3 2024 profitability, with net interest margin expanding to 3.29% FTE, stable loan growth, and strong capital ratios despite merger-related costs - Key highlights for Q3 2024 include improved profitability, net interest margin expansion to 3.29% FTE, stable loan growth, and a decline in classified loans146 - Non-interest expense in Q3 2024 totaled $38.6 million, including $2.4 million of costs related to the proposed merger with First Busey Corporation146162 - The company's loan portfolio is balanced, with 44% in commercial & industrial and owner-occupied CRE, and 44% in non-owner-occupied CRE, with restaurants (11%) and industrial (22%) as largest segments respectively174175177 Key Performance Ratios | Metric | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Return on average assets | 1.02% | 0.94% | | Return on average common equity | 10.54% | 10.19% | | Diluted earnings per common share | $0.39 | $0.34 | | Efficiency ratio | 57.52% | 59.49% | Item 3. Quantitative and Qualitative Disclosures about Market Risk The company's primary market risk is interest rate volatility, with a slight liability-sensitive position as of September 30, 2024, as shown by rate shock analysis Interest Rate Shock Simulation (as of Sep 30, 2024) | Change in Interest Rate (bps) | Percent Change in Net Interest Income | Percent Change in Fair Value of Equity | | :--- | :--- | :--- | | +200 | (1.38)% | (15.08)% | | +100 | (0.72)% | (7.71)% | | -100 | 0.98% | 7.91% | | -200 | 2.11% | 15.95% | - The company's interest rate position is slightly liability sensitive as of September 30, 2024, influenced by a $250 million notional interest rate collar and the shorter duration of its time deposit portfolio224 Item 4. Controls and Procedures Disclosure controls and procedures were effective as of September 30, 2024, with no material changes to internal control over financial reporting during Q3 2024 - Management concluded that the company's disclosure controls and procedures were effective as of September 30, 2024226 - No material changes were made to the internal control over financial reporting during the third quarter of 2024227 Part II. Other Information Item 1. Legal Proceedings The company is involved in various lawsuits in the normal course of business, not expected to have a material adverse effect - The company is subject to various legal proceedings in the ordinary course of business but does not expect them to have a material adverse effect228 Item 1A. Risk Factors New risk factors relate to the pending merger, including stock price fluctuations, integration difficulties, failure to realize benefits, and regulatory approval uncertainties - The fixed exchange ratio in the merger means CrossFirst stockholders are exposed to fluctuations in Busey's stock price, and the final value of the consideration is uncertain230231 - The company expects to incur substantial non-recurring costs related to the merger and integration, with anticipated pre-tax transaction costs for both companies estimated at approximately $75.3 million236237 - There is a risk that regulatory approvals may be delayed, may impose adverse conditions, or may not be obtained, which could delay or prevent the merger's completion246247248 - Failure to complete the merger could have adverse consequences, including negative market reactions, unrecovered transaction expenses, and a potential termination fee of $36.7 million payable to Busey under certain circumstances258 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds No shares were repurchased during Q3 2024, with $11.4 million remaining available under the existing $30 million share repurchase program - No shares were repurchased during the third quarter of 2024271 - As of September 30, 2024, $11.4 million remains available under the company's $30 million share repurchase program271 Item 5. Other Information An investor presentation will be used in meetings with analysts and investors from November 1, 2024, with no Rule 10b5-1 trading arrangement changes by officers or directors - An investor presentation (Exhibit 99.2) is intended for use in meetings with analysts and investors from November 1, 2024273 Item 6. Exhibit Index This section lists exhibits filed with the Form 10-Q, including the Merger Agreement, officer certifications, and the investor presentation
CrossFirst Bankshares(CFB) - 2024 Q3 - Quarterly Report